November Dip 2.0: $16 for Silver and $1,188 for Gold Today

Will the millennial vault swimming pools in the future be filled with gold credit cards instead of Krugerrands? I came across this article where you can actually buy a vault swimming pool full of coins and realize what an archaic and misunderstood lost art of wealth management in the form of physical gold.

When gold prices peaked in 2011 at $1,921 a troy ounce we were flooded with almost daily ads on tv for cash for gold pop up shops. Now that were seeing a new low price per troy ounce of $1,188, those shops have gone the way of Blockbuster video and the dodo. Gold to me became a terrible idea when I saw the bottom hit twice in November 2015 and again today at nearly the same price. Naturally on this second dip, I went out to a coin shop and bought every size Krugerrand which come in sizes of 1 oz, 1/2 oz, 1/4 oz, and 1/10 oz. Mostly because of the mysterious allure that is the former, trade embargoed, contraband South African gold bullion coin.

Today I’m not talking about buying an ETN or ETF like JNUG or NUGT (bears JDST or DUST) but the actual physical buying of gold coins. Holding on to them, making sure it doesn’t get lost in the couch, hoping to cash out when its over $5,000 an ounce (unlikely) ! However I side with Davey Nelson who says its a terrible investment for many reasons. For one I have to store them at the Safe Deposit Box at the bank, so the coins don’t get eaten by my child. Luckily the Military Version of the Chase checking account comes with a tiny Safe Deposit Box for free. Not too many securities out there that can be lost in such a manner as accidental ingestion.

The other thing that sucks about gold is its so damn expensive to trade in and out. Everywhere I go they charge at least $40 premium on spot buying or selling. Even at APMEX we have to spend $40 each way, If I bought a Krugerrand today and decide to sell it back tomorrow I would spend $80 on just premiums on a $1,188 “investment”, a 6% loss right there.

The whole gold industry appears to be unregulated and shady in my book. It is very manipulative using you fears of market collapse to get you to trade a bunch of worthless electronic digits in your bank account for gold rounds. Recently some grandparents were targets of a scam to upsell them on collectible gold coins. The fear of market doom should not be the motivation for you in buying gold. I mean how the hell are you going to buy a gallon of milk with a $1,000 gold coin?

Silver on the other hand is also at an all time low. There is a tradition of buying your first salute as seen in the movie Officer and a Gentleman. They make great gifts, just make sure your recipient doesn’t spend it or deposit an American Silver Eagle at face value like a dumbass. They are coming out with the Silver Krugerrand in 2017 which has no face value at all. I hope that prevents such asshattery.

Just in time for Christmas, if you need to hit that minimum spend you can buy these gold and silver coins with a credit card just like the good old days at the US Mint. However APMEX will charge you a credit card fee on top of the premium, also no AmEx. Buy gold and silver because its shiny and heavy, but don’t go nuts and actually think its a good solid investment product.